Q1 2024 Zoetis Inc Earnings Call

Frank Vice President of Investor Relations for the wettest.

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Dot com at this time, all participants have been placed in a listen only mode and the floor will be opened for your questions. Following the presentation. If you would like to ask a question at that time. Please press star one on your telephone keypad. If at any point. Your question has been answered you may remove yourself from the queue by pressing star two inch.

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Thank you operator, good morning, everyone and welcome to the <unk> first quarter 2024 earnings call.

And today by Kristin Peck, our Chief Executive Officer, Joseph Our Chief Financial Officer.

Before we begin I'll remind you that the slides presented on this call are available on the Investor Relations section of our website.

And that our remarks today will include forward looking statements and that actual results could differ materially from those projections.

For a list and description of certain factors that could cause results to differ I refer you to the forward looking statements in today's press release, and our SEC filings, including but not limited to our annual report on Form 10-K, and our reports on Form 10-Q.

Our remarks today will also include references to certain financial measures, which were not prepared in accordance with generally accepted accounting principles or U S. GAAP a reconciliation of these non-GAAP financial measures to the most directly comparable U S. GAAP measures is included in the financial tables that accompany our earnings press release and the Companys 8-K.

<unk> data today Thursday may 2nd.

2024, we also cite operational results, which exclude the impact of foreign exchange and with that I will turn the call over to Kristen. Thank you, Steve and good morning, everyone and welcome to our first quarter earnings call for 2024 to date, we reported outstanding first quarter results underscored by steady demand for our products.

Our focused strategy and our purpose driven colleagues, we delivered 12% operational revenue growth and grew adjusted net income 15% operationally in line with the tenants of our value proposition drill.

Driven by the launch of our osteoarthritis pain franchise. The U S led the way with 16% growth and 8% operational growth internationally.

Specifically globally lowbrow up grew 189% operationally, including $40 million of sales in the U S in line with our expectations.

The powerful human animal bond fueled demand for our companion animal portfolio with 20% growth operationally by livestock declined 1% operationally. This quarter's results even amidst global uncertainty are a testament once again to the power of our diverse and durable portfolio across markets.

<unk> and therapeutic area. It also highlights the continued rise and resilience of the animal health industry.

Our purpose and performance are rooted in science, which has always been the great disruptor and animal health is increasingly essential for nutrition and companionship caregivers demand even more high quality innovation.

That means we identify the most prevalent area of unmet veterinary need and invest and develop manufacture and deliver life changing products that customers have been waiting for take for example, labrecque and celestia, our injectable monoclonal antibodies to treat OA pain in dogs, and cats, which are helping.

The pet's returned to play.

With more than 18 million doses distributed worldwide, we are providing long lasting relief to animals, many of whom were previously undiagnosed or untreated due to the limitations of nsaids.

With nearly 40% of all dogs suffering from OE paying globally. We believe just one third of those are being treated so we're just scratching the surface of care and cats are visiting the clinic more often in fact, we're helping curb clinic fears with bond cat. The first FDA approved product to alleviate anxiety and cat.

Which means we're expanding care and historically under Medicalized area of the market.

We understand that social media as a forum for convening, a place where pet owners to connect and to share, but we also have a responsibility to empower our customers to make informed decisions grounded in science and data.

We are unwavering in our commitment to rigorous safety and quality standards, which is earned us the trust and confidence our veterinarians worldwide back.

Backed by that commitment labella, and celestia are safe and effective they are anchored in 10 years of science and have been used in Europe for more than three years.

In the U S, 78% of veterinarians, who are at the center of care are very satisfied with Lirella. This is driven by real world experience and consistent with the feedback we hear in other markets.

And our research indicates that 46% of that globally will treat await earlier and 65% will treat more dog novel umbrella is available.

To accurately reaffirmed the safety and efficacy of these therapies, we are doubling down working directly with veterinarians, who need these products hosting live sessions with our chief Medical officer, and expanding online education and training, while deploying capital to expand our DTC strategy.

And veterinarians continue to be confident in labella as evidenced by our recent blind survey of U S debt confirming that perception and intent to prescribe remain unchanged.

We remain confident that OA pain could be our next billion dollar franchise, because we are meeting the needs of an underserved market.

We are growing by nearly every measure metric, including adoption penetration reorder rate patient share and expanded utilization.

And looking at our four week Rolling average in the U S. We're excited to report that still steadily increased through April.

Our performance speaks to the power of the human animal bond discerning pet owners want options and they will work with their best define relief for their best friends.

Beyond the OA pain, the wettest isn't able to lead the market and other key categories, because we deeply understand our customers' needs.

This allows us to not only compete in existing markets, but again to create entirely new ones.

And scientists created something completely unique to our industry 2 billion dollar franchises, our parasiticide portfolio expanded the total market based on deep customer insights before some paragon <unk> trio, we were number five in this category. These innovations changed how we compete today we are.

Number two and continue gaining share and growing the market even in the face of competition.

Similarly, we were first to recognize the new therapies, where needed to treat canine safely and effectively that market boresight change the treatment paradigm and Revolutionised Petcare I.

Decade of Dermatology has led to three products 20, major lifecycle enhancements, including cider point, the first ever animal health monoclonal antibody and the first chewable with Apple culture.

From what was once believed to be just 100 million dollar market has grown to $1.4 billion, because we know what our customers need today.

Today more than 18 million dogs are treated for allergic asthma, and atopic dermatitis and another $13 million remain untreated globally. We built a 1 billion dollar franchise and demonstrated the durability of our portfolio and we will continue growing this franchise underpinned by strong brand equity first mover.

Damage lifecycle innovation and strong customer relationships.

We've led in parasiticide, dermatology and now OA pain and each time, our innovations have created new categories in animal health, you've seen the total industry opportunity expand now.

Now moving to livestock I'm sure you all saw the news this week on the announcement of our agreement with fiber of animal health to sell our global medicated feed additives and certain water soluble product portfolios and related assets for $350 million.

This deal is another Great example of the way. This is disciplined capital allocation strategy to focus investments in areas with the greatest growth potential and innovation that are aligned with our key capabilities.

I'm confident that under fibrils management, the global reach of these products will continue to expand to meet customer needs worldwide.

We remain very committed to livestock and just sharpening our focus and our core innovative livestock growth areas, including preventative antibiotic alternatives and genetics.

In summary for more than 70 years, so what it had been leading the industry with our commitment to innovation, we've invested over $5 billion in R&D since our IPO, which has brought more than 300 product lines to the market.

Science is and always has been the great disruptor and at the core of our success in delivering the innovations that veterinarians livestock producers and pet owners expect from us.

Our pursuit of science has lead to breakthroughs in dermatology like site appointed apical Chew and parasiticide, just comparing a trio and now the latest in OA pain with a rollout and Valencia that are revolutionizing animal health blazing, new trails isn't easy, but time and again, our purpose driven colleagues have proven there.

Our ability to expand our industry leadership and board entirely new markets and we remain committed to delivering strong growth there were innovative franchises and diverse portfolio, while continuing to invest for the future.

Looking ahead to the remainder of 2024, our increased operational guidance reflects the resilience of the animal health market and the execution of our strategic growth priorities. We will continue to be disciplined yet adaptable and our approach to the opportunities potential challenges and economic shifts that occur throughout the year and with the.

That I will turn it over to Ray.

Thank you and good morning, everyone.

As Christian mentioned, we had an outstanding start to the year driven by the underlying strength of our companion animal portfolio, particularly our innovative products.

As well as price growth across all species.

In the first quarter, we generated revenue of $2 $2 billion growing 10% on a reported basis and 12% on an operational basis.

Adjusted net income of $634 million grew 4% on a reported basis and 15% on an operational basis.

Oh, 12% operational revenue growth was due to the underlying strength of our companion animal portfolio aided by the impact of a weak comparative quarter in our U S companion animal business. However, the majority of this variability to growth was offset by headwinds related to economic conditions in China.

Pack or a tough comparator quarter in livestock due to the timing of supply for certain products last year and inventory destocking related to our U S diagnostics sales model change.

Of the 12% operational revenue growth, 7% its been price with 5% growth in volume.

While we saw price growth across our portfolio.

Was favorably impacted by hydro refinishing, dairy markets, especially Argentina, which contributed 2% to our overall price growth.

The volume growth was driven primarily by new products, including our monoclonal antibodies for pain. The ghrelin. So thank you as well as our key dermatology products and <unk> trio.

On a segment basis, the U S posted $1 $2 billion in revenue growing 16% on the quarter, while our international segment reported revenue of $1 billion with operational growth of 8% on the quarter.

Our companion animal portfolio was the main driver of revenue growth in Q1 growing 20% operationally. This growth was partially offset by livestock, which declined 1% on an operational basis.

We saw double just because it's just operational companion animal growth in both our U S and our international segment again this quarter driven by the strong performance of our innovative products with contributions from both volume and price.

And Parker trio was the primary driver of growth in the quarter generating $243 million globally, representing operational growth of 61%.

We saw strong demand for trio as well as continued growth in patient share even with competition.

Our OA pain maps, we're also a significant contributor to growth posting $131 million in the quarter.

Global growth came from the impact of new launch markets, both in the U S and internationally.

And our early launch new markets, we sent that surveys showed an increase in muscle and therapy and expansion into more moderate or rate cases.

Our key dermatology products grew 25% operationally in the quarter with $360 million in global revenue.

Welcome within Dermatology was driven primarily by African franchise, where we are seeing solid conversion to Africa truthful, including a modest impact from initial distributor stocking in the U S.

So I had a point of growth continues to be driven by vet and pet owner preferences for injectable methods of treatment.

Our global companion animal diagnostics portfolio declined 12% operationally with declines in the U S driven by distribution model change.

These declines were anticipated as our distribution partners sold off the remaining inventory due to our transition to a direct only model for our U S diagnostics portfolio.

U S declines were partially offset by growth internationally.

Our lifestyle portfolio declined 1% operationally as expected driven by a tough comparative quarter in the prior year, especially in the U S as well as impacts from the ongoing economic condition in China.

This decline was partially offset by price growth in our other international markets.

Now moving on to revenue growth by segment for the quarter.

U S revenue was $1 $2 billion in the quarter growing 16% with companion animal growth of 25% and livestock posting a 7% decline.

The companion animal portfolio performance in the quarter was driven by some Packer trio, our key dermatology portfolio and the impact of the launch of <unk> in the U S as well as the impact of a weak comparative quarter.

Our outstanding U S companion animal growth came in the quarter, where we saw vet clinic visits decreased one 5%.

We continue to see growth in the therapeutic visits while wellness visits drove the decline.

Our growth in the retail and home delivery continue to outpace that cleaning fulfillment, which is based on growing pet owner preference for these alternative channels.

This dynamic is expected to put continued pressure on total vet clinic visits without impacting our expectations for revenue.

Despite the visit decline revenue and spend per visit in the clinic grew four 5% and 6%, respectively, which reflects continued pedal and their willingness to pay.

Turning to product performance <unk>.

Erika trio posted sales of $205 million in the quarter growing 61%.

We continue to be the market leader in the Triple combination parasiticide space.

Our leading footprint across channels has allowed us to continue to drug dosage growth through increased compliance even with declines in wellness visits at the clinic.

In addition to a weak comparable period in the prior year, we are seeing favorable price realization due to more targeted discount programs to vets as well as channel dynamics.

Key dermatology products sales in the U S with $233 million for the quarter growing 27%.

We saw growth in both price and volume and across both Africa, well inside of <unk>.

Well, it's also benefited from a weak comparable period in the prior year.

Market demand for our dermatology products remains high.

In the quarter, we saw growth in both our patient share as well as higher periodic visits in the clinic.

Additionally, with a retail auto ship programs continue to bolster compliance.

At the beginning of April we made <unk> available through our distribution partners.

Our pay Matt Wellans Celesio.

The combined $57 million in U S sales in Q1.

<unk> generated $40 million in the quarter with underlying demand continuing to build on the momentum from our full launch in Q4 of last year.

Excluding the impact of initial clinic stocking, which we provided last quarter, we are seeing robust sequential quarter growth and the gorilla in line with expectations.

We continue to see good growth and penetration as well as strong reorder rates, which are approaching 80%.

All of which points to positive real world satisfaction in the clinic and among pet owners.

We remain confident not just in the safety and efficacy of Luella, but also in our expected performance.

As Christina alluded to we have seen steady.

Increase increasing trend in our trailing four week sales average in the U S. Even into April after the increased media attention.

We continue to see steady progress in <unk>, which had U S sales of <unk>.

$17 million in the quarter more than doubling our prior year Q1 sales.

We have indicated the feline market need significant development.

But we are pleased with our progress thus far.

So linzess is now the market leading product for feline OA pain in the U S and we have seen a significant increase in the medicalized patient pool since March.

Our U S companion animal diagnostics portfolio declined 21% in the quarter driven primarily by distributor inventory work Downs following our channel strategy change.

This destocking is in line with our expectations and has negligible impact on our underlying demand.

U S livestock declined 7% in the quarter, while our underlying business performance in the quarter was as expected.

Our results are reflective of a strong comparative period in Q1 of 2023 and wish we grew 15% due to the return of supply on several products primarily in cattle.

Sales of swine products declined due to decreased sales of vaccines as well as Jackson.

In poultry, we saw declines as a result of increased generic competition in our medicated feed additive products.

Moving on to our international segment, where revenue grew 3% on a reported basis and 8% excluding the impact of foreign exchange.

Companion animal grew 14% operationally and livestock grew 2% operationally.

Increased sales of our international companion animal products were driven by the <unk> key dermatology.

Does your products vaccines and small animal parasiticide.

This growth was partially offset by impacts in China.

Our international OA pain maps grew 67% operationally to $74 million and combined revenue in the quarter.

International <unk> sales were $59 million growing 71% operationally.

Growth was balanced across new launch markets and our first wave EU markets.

We continue to see evolution in the European markets, where you have seen expansion in Laguardia fuse and moderate OA cases.

Which according to the latest that surveys now represents the majority of labella patients in Europe.

We remain pleased with the success of our DTC advertising campaigns, and increasing pet owner awareness Oh boy.

Valencia sales were $15 million internationally in the quarter growing 54% on an operational basis.

Our international key dermatology portfolio grew 23% operationally in the quarter posting $127 million in sales.

We saw double digit operational growth across most of our major markets driven by higher compliance and new patients.

Well. It was also favorably impacted by pre price increased by us and Japan and certain European markets.

Our international small animal parasiticide portfolio grew 6% operationally driven by office and Parker franchise with America trio growing 58% operationally to $38 million in sales.

Sure growth benefited from continued uptake in Europe, driven by key account penetration and field force effectiveness effectiveness as well as contributions from <unk> launch in China.

<unk> posted $56 million in revenue growing 22% on an operational basis in the quarter.

This growth was partially offset by a 29% operational decline in a resolution franchise, which generates a high proportion of sales in China.

International livestock grew 2% operationally in the quarter driven by price increases, especially in high inflationary markets.

Price growth was partially offset by volume declines across all of our species, partially driven by a tough comparative period in the prior year due to the return of supply of certain lifestyle products.

The volume declines in livestock were driven by cattle.

Tough comparable period related to supply and worsening market conditions in Australia.

Our international spine portfolio saw volume declines driven by China, where we saw lower hog prices as well as a reduction in herd sizes.

And sheep.

We saw declines from herd reductions due to expected weather conditions in Australia, and New Zealand as well as supply constraints on <unk> product.

As we mentioned last quarter, we continue to see economic challenges in China, where low consumer spending and high urban unemployment have reduced spending.

We are also seeing a slowdown in livestock with lower pork prices and smaller herd sizes.

The impact on our growth is expected to moderate late in the year, but we expect to continue to see headwinds throughout the year across both companion animal and livestock.

Now moving on to the rest of the P&L for the quarter.

Adjusted gross margins of 77% declined 10 basis points on a reported basis compared to the prior year.

Foreign exchange had an unfavorable impact of 180 basis points on a reported adjusted gross margins.

Excluding FX, we saw higher margins due to price increases.

Well mix and lower freight costs, partially offset by higher manufacturing costs, especially in hyper inflationary markets.

Adjusted operating expenses increased 11% operationally driven primarily by SG&A growth of 10% operationally, mainly due to higher compensation related expenses as well as increased advertising and promotion spend on our OA pain maps.

R&D grew 13% on an operational basis, driven by higher project spend related to both recent acquisitions as well as advancements of our pipeline candidates.

Seeing a slowdown in livestock with lower pork prices and smaller herd sizes.

The impact on our growth is expected to moderate late in the year.

The adjusted effective tax rate for the quarter was 19, 7% a decrease of 80 basis points, primarily due to a higher benefit in the U S related to foreign derived intangible income and a more favorable jurisdictional mix of earnings.

But we expect to continue to see headwinds throughout the year across both companion animal and livestock.

Speaker Change: Now moving on to the rest of the P&L for the quarter.

Adjusted gross margins of 77% declined 10 basis points on a reported basis compared to the prior year.

And finally, adjusted net income grew 15% operationally, despite a $31 million headwind to growth from the nonrecurring benefit of a prior year royalty settlement.

Foreign exchange had an unfavorable impact of 180 basis points on a reported adjusted gross margins.

Adjusted diluted EPS grew 17% operationally for the quarter.

Excluding FX, we saw higher margins due to price increases favorable mix.

Capital expenditures in the first quarter were $140 million.

And lower freight costs, partially offset by higher manufacturing costs, especially in hyper inflationary markets.

In the quarter, we repurchased $339 million of <unk> shares.

Speaker Change: Adjusted operating expenses increased 11% operationally driven primarily by SG&A growth of 10% operationally, mainly due to higher compensation related expenses as well as increased advertising and promotion spend on our OA pain maps.

Before moving to guidance I wanted to comment on our recent announcement to divest our medicated feed additive portfolio and certain water soluble products to <unk> animal health.

This is a transaction that <unk> disciplined capital allocation strategy to focus our investments on innovative solutions that advance animal health productivity and sustainability.

Speaker Change: R&D grew 13% on an operational basis, driven by higher project spend related to both recent acquisitions as well as advancements of our pipeline candidates.

This divestiture will allow us to remain focused on other lifecycle solutions, including vaccine biologic and generic programs that are more aligned with our strategic priorities.

Speaker Change: The adjusted effective tax rate for the quarter was 19, 7% a decrease of 80 basis points, primarily due to a higher benefit in the U S related to foreign derived intangible income and a more favorable jurisdictional mix of earnings.

Now moving onto guidance for full year 2024.

As we have mentioned, we had an outstanding first quarter that highlighted our ability to deliver it through multiple sources of growth.

Speaker Change: And finally I will.

Speaker Change: Adjusted net income grew 15% operationally, despite a $31 million headwind to growth from the nonrecurring benefit of a prior year royalty settlement.

Our performance in companion animal, especially in parasiticide, and our key dermatology franchises exceeded our expectations.

Speaker Change: Adjusted diluted EPS grew 17% operationally for the quarter.

Additionally, we continue to be pleased with the progress of the U S launch of Labella and are confident in our ability to meet expectations.

Speaker Change: Capital expenditures in the first quarter were $140 million.

Speaker Change: In the quarter, we repurchased $339 million of <unk> shares.

We are therefore, raising our 2024 operational guidance provided during the February earnings call.

Speaker Change: Before moving to guidance I'd like to comment on our recent announcement to divest our medicated feed additives portfolio and certain water soluble products to phibro animal health.

Note that guidance reflects foreign exchange rates as of late April.

The updated foreign exchange rates negatively impacted our reported revenue guidance by approximately 2% and our reported adjusted net income guidance by approximately 4% when compared to our initial guidance issued in February.

Speaker Change: This is a transaction that <unk> disciplined capital allocation strategy to focus our investments on innovative solutions that advance animal health productivity and sustainability.

For the year, we expect revenue between 9.05 and $9 201 billion.

Speaker Change: This divestiture will allow us to remain focused on other lifecycle solutions, including vaccine biologic and generic programs that are more aligned with our strategic priorities.

Representing a range of eight five to $10 five operational growth.

Our increase in operational growth is reflective of Argentina is pricing impact as well as due to performance in our companion animal parasiticide and key dermatology products.

Speaker Change: Now moving onto guidance for full year 2024.

Speaker Change: As we have mentioned, we had an outstanding first quarter that highlighted our ability to deliver it through multiple sources of growth.

We now expect our full year operational growth for <unk> trio to be double digits.

Speaker Change: Our performance in companion animal, especially in parasiticide, and our key dermatology franchises exceeded our expectations.

While we expect growth in our key dermatology products to be in the high single digit range.

Speaker Change: Additionally, we continue to be pleased with the progress of the U S launch of Labella and are confident in our ability to meet expectations.

As we stated earlier, we remain pleased with our U S launch of Labella, our expectations for the gorilla for the year remain unchanged.

Speaker Change: We are therefore, raising our 2024 operational guidance provided during February earnings call.

Moving down the P&L, we now expect adjusted net income to be in the range of $2 62 billion to $2 67 billion.

Speaker Change: Note that guidance reflects foreign exchange rates as of late April.

Presenting operational growth of 13% to 15%.

Speaker Change: Updated foreign exchange rates negatively impacted our reported revenue guidance by approximately 2% and our reported adjusted net income guidance by approximately 4% when compared to our initial guidance issued in February.

And finally, we expect adjusted diluted EPS to be in the range of $5 71.

To $5 81.

And reported diluted EPS to be in the range of $5 34.

Speaker Change: For the year, we expect revenue between $9 zero, five and $9 201 billion.

To $5 44.

Just to summarize before we go to Q&A, we are very pleased with our start to the year.

Speaker Change: Representing a range of eight five to $10 five operational growth.

While our reported results are reflective of various foreign exchange related headwinds operationally, we continued to deliver growth across our key therapeutic areas.

Speaker Change: Our increase in operational growth is reflective of Argentina's pricing impact as well as due to performance in our companion animal parasiticide and key dermatology products.

Most of our major markets.

This growth highlights the diversity and dependability that allows us to continually outpace the animal health market.

Speaker Change: We now expect our full year operational growth for <unk> trio to be double digits.

Currently we continue to lead the way, creating new markets and launching new innovation that increases the standard of medical care for animals.

Speaker Change: While we expect growth in our key dermatology products to be in the high single digit range.

Speaker Change: As we stated earlier, we remain pleased with our U S launch of Labella.

Now I'll hand things over to the operator to open the line for your questions.

Speaker Change: Our expectations for the gorilla for the year remain unchanged.

Operator.

Certainly at this time, if you would like to ask a question. Please press star one on your telephone keypad, you may remove yourself from the queue by pressing star two we ask that you limit yourself to one question and then queue up again with any follow up your line will be muted. When you complete your question with that we will take our first question is coming from Michael <unk> with Bank of America. Please go ahead.

Speaker Change: Moving down the P&L, we now expect adjusted net income to be in the range of $2 62 billion to $2 67 billion.

Speaker Change: Presenting operational growth of 13% to 15%.

Speaker Change: And finally, we expect adjusted diluted EPS to be in the range of $5 71.

Speaker Change: To $5 81.

Good.

Speaker Change: And reported diluted EPS to be in the range of <unk> 34.

Great. Thanks.

Thanks for taking the question.

First I wanted to ask just about the guide change it seems like there's just so many moving pieces right now.

Speaker Change: To $5 44.

Speaker Change: Just to summarize before we go to Q&A, we are very pleased with our start to the year.

The FX move you've got all the price you're taking in Argentina from a stocking comments for.

Speaker Change: While our reported results are reflective of various foreign exchange related headwinds operationally, we continued to deliver growth across our key therapeutic areas and across most of our major markets.

<unk> and obviously library.

Early in the year to decide to raise the guide just report what went into that and what do you see as the upside risk or downside risk that as you go through the year and then just a quick follow up question and I'll hop with both and all questions on margin with all the price with all the strength of companion gross margin was a little weaker in the quarter.

Speaker Change: This growth highlights the diversity and dependability that allows us to continually outpace the animal health market.

Speaker Change: Additionally, we continue to lead the way, creating new markets and launching new innovation that increases the standard of medical care for animals.

And I'm raising EPS operationally for the year, just whats going on with the gross margin and watching the flow through from our companion animal portfolio.

Speaker Change: Now I'll hand things over to the operator to open the line for your questions.

You're better.

Speaker Change: Operator.

I'll be happy to take this Mike look we're very pleased with an outstanding quarter to start the year.

Speaker Change: At this time, if you would like to ask a question. Please press star one on your telephone keypad Nathan.

Delivering 12% operational growth in revenue, 15% and adjusted net income from an operational perspective.

Speaker Change: Ladies and gentlemen, thank you by pressing star keel, we ask that you limit yourself to one question in queue up again with any follow up your line will be muted. When you complete your question with that we will take our first question is coming from Michael <unk> with Bank of America. Please go ahead.

Even more pleased with this in terms of the guidance of course, there are puts and takes as you as you laid out the performance in the quarter. When we think about the prior year comps. We think these are largely offsetting puts and takes that go into the performance and I think that that feeds into the later part of your question, which is how do we decided to go into.

Speaker Change: Great.

Michael: Thanks for taking the question.

Michael: I wanted to ask about the guide change it seems like there's just so many moving pieces right now.

Speaker Change: Sachs move you've got all the price you're taking in Argentina.

Speaker Change: Stocking comments for.

Increasing our guidance from an operational perspective, but when you look at the puts and takes clearly.

Speaker Change: Perhaps what's doable.

Speaker Change: Obviously library.

Performance from our trio and key derm.

Speaker Change: Early in the year to decide to raise the guide just sort of like what went into that and what do you see it.

<unk> growth as we continue to ramp the launch of Labella now in the U S, but across international markets.

Speaker Change: Upside risk or downside risk to that as you go through the year and then just a quick follow up question and I'll squeeze both in all questions on margin with all the price with all the strength of companion gross margin was a little weaker in the quarter.

It gave us a lot of confidence in terms of underpinning the growth that you saw in the quarter from an operational perspective, yes. There are some easier comps when you look at the companion animal business, particularly in the U S. We've talked about those Atlanta last year with the Destocking and the timing of promotional.

Speaker Change: And you're not raising EPS operationally for the year.

Speaker Change: What's going on with the gross margin and why is it the flow through.

Speaker Change: On your animal portfolio better thanks.

Promotional activity et cetera, but we also had some headwinds we had strong comps across livestock in particular because of the timing of supply last year.

Speaker Change: I'll be happy to take this Mike look we're very pleased with an outstanding quarter to start the year.

Mike: <unk> delivering 12% operational growth at revenue, 15% and adjusted net income from an operational perspective.

As well as the China market that we've been talking about as we expected as well in Argentina.

Speaker Change: We were pleased with this in terms of the guidance of course, there are puts and takes as you as you laid out the performance in the quarter. When we think about the prior year comps. We think these are largely offsetting puts and takes that go into the performance and I think that feeds into the later part of your question, which is how do we decided to go into.

Given the pricing impacts.

In fact successful in Australia, New Zealand, so when we take a look at those we think theres, probably one to two points of tailwind on that basis is what we would estimate coming into the quarter.

But then when you look at the bottom line, 15% operational growth in adjusted net income. Despite the royalty settlement that we had last year again as an offsetting element. So we still end up with a sort of an operational growth in the same range that we've delivered and so though it's still early in the year, we have confidence in the underlying market and demand.

Speaker Change: Increasing our guidance from an operational perspective, when we look at the puts and takes clearly.

Speaker Change: Performance from our trio and key derm.

Speaker Change: <unk> growth as we continue to ramp the launch of Labella now in the U S, but across international markets.

We see across our products, we're seeing increased critically visits into the clinic for dermatology trio, despite head to head competition had a phenomenal quarter up 61%.

Speaker Change: It gave us a lot of confidence in terms of underpinning the growth that you saw in the quarter from an operational perspective, yes. There are some easier comps when you look at the companion animal business, particularly in the U S. We've talked about those at less last year with the Destocking and the price and the timing of.

With $243 million of revenue with the U S, leading that 61% as well so when we take all those into consideration and we're seeing price realization across the globe, including increased price from Hyperinflationary market like Argentina. So it gave us enough confidence to be able to raise the guidance and still be very confident in delivering.

Speaker Change: Promotional activity et cetera, but we also had some headwinds we had strong comps across livestock in particular because of the timing of supply last year.

Speaker Change: As well as the China market that we've been talking about as we expected as well in Argentina.

The revised guidance that we did today.

Now in terms of margins, let me just make sure I give you.

Speaker Change: Given the pricing impacts.

Cover that if you look at the headline rate the gross margins are down about 10 basis points.

Speaker Change: Impacts et cetera, and then Australia, New Zealand so when we take a look at those we think theres, probably one to two points of tailwind on a net basis is what we would estimate coming into the quarter.

Effects had about.

Nearly 200 basis point headwind.

In this I think it's important to remind everyone. There is.

Speaker Change: But then when you look at the bottom line, 15% operational growth in adjusted net income. Despite the royalty settlement that we had last year again is an offsetting element. So we still end up with a sort of an operational growth in the same range that we've delivered and so though it is still early in the year, we have confidence in the underlying market and demand.

A significant devaluation in Argentina that occurred two times last year right in December.

As well as parts of that in August the December devaluation is actually in our first quarter keep in mind, our international operations are close their books a month earlier. So December is actually Q1, so you're seeing the impact of the Argentina devaluation play out, particularly as you look at inventories and the effects on Cogs cost of goods sold as well as lower in the P&L and so when.

Speaker Change: We see across our products, we're seeing increased critically visits into the clinic for dermatology trio, despite head to head competition had a phenomenal quarter up 61%.

You factor those out we actually had about a 200 basis point expansion.

Speaker Change: With $243 million of revenue with the U S, leading that 61% as well so when we take all those into consideration and we're seeing price realization across the globe, including increased price from Hyperinflationary market like Argentina. So it gave us enough confidence to be able to raise the guidance and still be very confident in delivering.

Operationally in our gross margins, which again aided our way into the expansion of adjusted net income and growing that at 15%.

And our next question comes from Jon Block with Stifel. Please go ahead.

Great. Thanks, guys good morning.

I guess I'll ask both upfront as well.

Speaker Change: The revised guidance that we did do that.

Speaker Change: Now in terms of margins, let me just make sure I give you.

A lot of questions on the Argentina. So hope this is clear.

Speaker Change: Cover that if you look at the headline rate the gross margins are down about 10 basis points.

Straight to the top line was you raised the guide revenue.

Speaker Change: <unk> had about.

150 bps for the year.

Speaker Change: Nearly 200 basis point headwind.

You may continue to grab some year over year growth in the quarter from Argentina, if I have that right.

Speaker Change: In this I think it's important to remind everyone. There is.

Speaker Change: A significant devaluation in Argentina that occurred two times last year right in December.

The incremental growth contribution from origin to look for the year.

Speaker Change: As well as prior to that in August the December devaluation is actually in our first quarter keep in mind, our international operations are close their books a month earlier. So December is actually Q1, so you're seeing the impact of the Argentina devaluation play out, particularly as you look at inventories and the effects on Cogs cost of goods sold as well as lower in the P&L and so when.

Do you think everyone's like trying to figure out what the range is called like ex Argentina due to that markets hyper inflationary environment.

That's clear let me know if its not and then maybe just to shift gears.

Christian on my broad very helpful comments on the April run rate and over.

We hear about a safe drug that might have some issues indulge with neurological issues. So just would love your thoughts on on that and does the company plan to do any call. It follow up studies, maybe addressing select AE.

Speaker Change: You factor those out we actually had about a 200 basis point expansion.

Speaker Change: Operationally in our gross margins, which again aided our way into the expansion of adjusted net income and growing that at 15%.

Speaker Change: And our next question comes from Jon Block with Stifel. Please go ahead.

That'd be great. Thanks for your time guys.

Jonathan David Block: Great. Thanks, guys good morning.

I'll take the Argentina question first and then Christian will cover Labella look.

Jonathan David Block: I guess I'll ask both upfront as well.

Jonathan David Block: A lot of questions on Argentina. So hope this is clear.

The way I look at it as we said in the prepared commentary and you quoted here there are 200 basis points.

Jonathan David Block: Strength in the top line was big.

Contribution to the topline from Argentina in the quarter and so if I were to say look we're still early in the year and we'll continue to look to take price in that market and we will have to watch how that plays out between price and volume as we go into a hyperinflationary market, we're pegging, where we're looking at based on the actuals and what we anticipate but again, it's still early in the year. So if you.

Jonathan David Block: Guide revenue.

Jonathan David Block: By 150 bps for the year.

Jonathan David Block: You may continue to grab some year over year growth in the quarter from Argentina, if I have that right.

Jonathan David Block: The incremental growth contribution from Oregon, tooled up for the year.

Speaker Change: How do you think everyone's like trying to figure out what the range is call. It like ex Argentina due to that markets hyper inflationary environment I Hope that's clear, let me know, but its not and then maybe just to shift gears.

I'll take the 200 basis points and spread them for the year.

Fact, you could say, that's 50 basis points contribution through the year, if I don't account for any more price from hereon rates and so that's kind of how you would look at it and said well the other 100 basis points in the race is from the rest of the underlying business. The answer is somewhere between there right, but certainly theres contribution from the growth were seeing which we said it's above our.

Speaker Change: Christian on Libra very helpful comments on the April run rate and over checks, we hear about a safe drug that might have some issues indulge with neurological issues. So just would love your thoughts on on that and does the company pulled to do any call. It follow up studies, maybe addressing select AE.

<unk> for derm franchise, delivering $360 million growing 20, 25% on the quarter as well as <unk>, which continues to perform really well for us and so those I would say are significant contributors to the top line guide that we gave so interesting that the top line by 150 basis points.

Speaker Change: <unk>.

Speaker Change: That'd be great. Thanks for your time guys.

Speaker Change: I'll take the Argentina question first and then Christian will cover Labella look.

Speaker Change: The way I look at it as we said in the prepared commentary and you quoted here there are 200 basis point.

In terms of the range of operational growth and Argentina is a piece of that but I would say there is a significant contribution from the underlying business as well.

Speaker Change: Contribution to the topline from Argentina in the quarter and so if I were to say look we're still early in the year and we'll continue to look to take price in that market and we will have to watch how that plays out between price and volume as we go into a hyperinflationary market, we're pegging, where we're looking at based on the actuals and what we anticipate but again, it's still early in the year. So if you.

Sure Jonathan I'll take the second part of your question on <unk> I mean, first I really want to underscore that we have the utmost confidence in the safety and efficacy of umbrella.

It's been used for over three years.

For globe and over $14 million and it's approved in over 50 countries and if you overall look at the rate of reported adverse events.

Speaker Change: I'll take the 200 basis points and spread them for the year in effect you could say it is 50 basis points contribution through the year, if I don't account for any more price from hereon.

It's about 18% per 10000, or 0.18% globally and I think it's important to keep in mind that no single adverse event is classified under the EMEA guidelines as more than rare, which is more than one to 10 out of 10000. So we remain very confident in this.

Speaker Change: And so that's kind of how you look at it and say well the other 100 basis points in the race is from the rest of the underlying business. The answer is somewhere between there right, but certainly theres contribution from the growth were seeing which we said it's above our expectations for derm franchise, delivering $360 million growing 20, 25% on the quarter.

Safety and efficacy of this product we watch these reported adverse events very carefully it's an important part of what every pharmaceutical company does to make sure that we understand any trends that we're seeing we remain very confident in the data I you know I really want to underscore they've been on the market for three years.

Speaker Change: As well as <unk>, which continues to perform really well for us and so those I would say are significant contributors to the top line guide that we gave so interestingly the top line by 150 basis points.

Speaker Change: In terms of the range of operational growth and Argentina is a piece of that but I would say there is a significant contribution from the underlying business as well.

We continue to watch it.

Is that are coming in and to be clear the top adverse events. Today are number one that lack of efficacy is not working you maybe as well they wanted polydipsia, which is frequent drinking and the third being pollo urea, which is frequent urination. So the other ones you are talking about remain a rare side effects in other words not more than one.

Speaker Change: Sure Jonathan I'll take the second part of your question umbrella I mean first I really want to underscore that we have the utmost confidence in the safety and efficacy.

Speaker Change: It's been used for over three years.

Speaker Change: For globe and over $14 million and it's approved in over 50 countries and if you overall look at the rate of reported adverse events.

In 10000, so hopefully that answers your question.

Our next question will come from Erin Wright with Morgan Stanley. Please go ahead.

Speaker Change: It's about 18% per 10000, or 0.18% globally and I think it's important to keep in mind that no single adverse event is classified under the EMEA guidelines as more than rare, which is more than one to 10 out of 10000. So we remain very confident in this.

Great. Thanks.

Just another one on <unk> just given the <unk> that you had mentioned how do we think about the quarterly progression from here in the second quarter.

<unk>.

And then also just take new patient starts like how has that looked since Canada media attention and then on livestock and just a broader rationalization kind of of the business with the selling of the feed additives business, which needs Cheng Cheng in do you see other opportunities to further prune the portfolio and presumably this.

Speaker Change: Safety and efficacy of this product we watch these reported adverse events very carefully it's an important part of what every pharmaceutical company does to make sure that we understand any trends that we're seeing we remain very confident in the data I really want to underscore they've been on the market for three years.

Lance here long term topline growth targets and margin profile.

Speaker Change: We continue to watch it.

Just on the improved mix alone and the focus you can have on these higher growth higher margin businesses. What is your what it's look like in three to five years down the road because it can be potentially more skewed to that and how do you think about that thanks sure I'll let.

Speaker Change: Is that are coming in and to be clear the top adverse events. Today are number one that lack of efficacy is not working maybe as well as they wanted polydipsia, which is frequent drinking and the third being pollo urea, which is frequent urination. So the other ones you are talking about remain a rare side effects in other words not more than one.

We wanted to start with labella performance in the questions. You've got there and then I can take the last question I forgot Wendy yes, I'd be happy to look we delivered $100 million of revenue in Q1 on the grella, that's 189% growth over the prior year clearly the U S contributing $40 million is a big part of that but we're very pleased with the performance across our international markets.

Speaker Change: In 10000, so hopefully that answers your question.

Speaker Change: Our next question will come from Erin Wright with Morgan Stanley. Please go ahead.

Erin Wilson Wright: Great. Thanks.

Erin Wilson Wright: Just another one on my follow up just given the <unk> that you had mentioned how do we think about the quarterly progression from here in the second quarter.

As well for lip Wella and we saw a really strong sequential quarter growth across our international markets and we continue to see the uptake we're very pleased as well when surveyed.

Speaker Change: <unk>.

Erin Wilson Wright: And then also just take new patient starts like how has that looked since Canada media attention.

European vet clinics actually indicating that now you're seeing more than 50% of the cases, we have moderate cases, which is very encouraging as we continue to progress the products havent been out there for four three years in terms of the progression for the year included we continue to ramp in the U S.

Speaker Change: Then on livestock and just a broader rationalization kind of of the business with the selling of the feed additives. Thank you need.

Speaker Change: Cheng Cheng in do you see other opportunities to further pruning the portfolio and presumably this landscape long term top line growth targets and margin profile and just on the improved mix alone and you focus you can have on these higher growth higher margin businesses. What is your what it's look like in three to five years down the road because it can.

And as Christine said, and we said in the prepared commentary as we look at on a rolling four week basis through the quarter and beyond the quarter into April we continue to see steadily increasing orders of <unk> as well, which again.

Speaker Change: Maybe potentially more skewed to that and how do you think about that thanks sure outlet.

It caused us to be able to be confident in our expectations for labella as you look at the guidance that we gave as well, we're not going to get into very specific quarter by quarter, but I would say if you look at the $40 million in Q1, there's very little to no stocking in that number we did speak at length in February about the stocking and the initial <unk>.

Speaker Change: Let me why do you start with Labella performance in the questions. You've got there and then I can take the last question I forgot Wendy yes, I'd be happy to look we delivered $100 million of revenue in Q1 on the grella, that's 189% growth over the prior year clearly the U S contributing $40 million is a big part of that but we're very pleased with the performance across our international markets.

Launch.

The fourth quarter, we had about two five months at the end of the year for the product launch and you have to factor holidays as well into that and we saw a very fast penetration into the 60 plus percent and clinics very quickly, which means that there's a lot more stocking and then we gave you a range of somewhere between a quarter and a third.

Speaker Change: As well for La <unk>, and we saw a really strong sequential quarter growth across our international markets and we continue to see the uptake we're very pleased as well when surveyed.

Speaker Change: European vet clinics actually indicating that now you're seeing more than 50% of the cases, we have moderate cases, which is very encouraging as we continue to progress the product hasn't been out there for four three years in terms of the progression for the year clearly we continue to ramp in the U S.

Of that being stocking I would say, it's likely in the high end of that range. So when you factor that into the $40 million. This year. This is really substantial sequential world and labella and as we said we continue to see momentum in the product. The one thing I would remind everyone is in international we did have a number of markets that we launched in the second.

Speaker Change: And as Christine said, and we said in the prepared commentary as we look at on a rolling four week basis through the quarter and beyond the quarter into April we continue to see steadily increasing orders of <unk> as well, which again.

Order last year, so we'll be lapping those across the international markets are those include Canada, Brazil, Australia, Japan, and so we'll be lapping those but we still continue to expect to see strong meaningful growth for the product as well as sequential growth as we go through the rest of the year is what I would remind you in terms of how we expect progression for Labelle sure.

Speaker Change: Cause us to be able to be confident in our expectations for labella as you look at the guidance that we gave as well, we're not going to get into very specific quarter by quarter, but I would say if you look at the $40 million in Q1, there's very little to no stocking in that number we did speak at length in February about the stocking in the initial launch.

And Aaron I'll take your second question on livestock.

And I have talked about many times livestock generally historically in our industry has grown at around 2% to 4% I know we grew less for a period of time, when we were facing the low on drafting and with some large disease outbreak.

Speaker Change: <unk>.

Speaker Change: The fourth quarter, we had about two five months at the end of the year for the product launch and you have to factor holidays as well into that and we saw very fast penetration into 60 plus percent and clinics very quickly, which means that there's a lot more stocking in debt. We gave you a range of somewhere between a order and a third.

Across the globe, but I think what youre seeing as you know.

Over the last year and going into this year as you're returning more to those historic levels I think as you look at this year, we expect to be above that level again is when you mentioned Q1 is not a good indication do you look at sort of the comparable that we had there. So we remain very confident again in livestock. We believe we'll end up the higher end of that range as you look at the.

Speaker Change: That being stocking I would say, it's likely in the high end of that range. So when you factor that into the $40 million. This year. This is really substantial sequential growth in <unk>. As we said we continue to see momentum in the product. The one thing I would remind everyone is in international we did have a number of markets that we launched in the second quarter.

The divestiture of our medicated feed additive and water soluble portfolio and assets. We've continued to be disciplined around our capital allocation, we divested a pumpkin petcare. It last year. This is something that you know as a.

Speaker Change: Last year, so we'll be lapping those across the international markets are those include Canada, Brazil, Australia, Japan, and so we'll be lapping those but we still continue to expect to see strong meaningful growth for the product as well as sequential growth as we go through the rest of the year is what I would remind you in terms of how we expect progression for labella sure.

Leadership team, we continue to do we look at every asset we have we want to make sure that we're investing in the highest areas of growth. So I think that actually is something that's just a rigorous part of how we manage the company and as I think as you look at livestock, obviously, the divestiture of the medicated feed additives portfolio will increase the overall growth of the company and the overall growth of life.

Speaker Change: Aaron I'll take the second question on livestock.

Speaker Change: I have talked about many times livestock generally historically in our industry has grown at around 2% to 4% I know we grew less for a period of time, when we were facing the low on drafting and with some larger these outbreak.

And also help overall on margins, but our real focus of the divestiture really had to do with doubling down and investing and what we see are great potential in the livestock industry.

And really playing to what our core strength.

Speaker Change: Across the globe, but I think what youre seeing is the weather.

Preventatives into antibiotic alternatives into genetics, as we think about vaccines and biologics and new genetic solution. So again, we'll continue to look at our portfolio as we always have and as we've done every year, but remain confident in livestock and especially this year and our ability to grow faster than the market.

Speaker Change: Over the last year and going into this year as you're returning more to those historic levels I think as you look at this year, we expect to be above that level again is when you mentioned Q1 is not a good indication do you look at sort of the comparable that we had there. So we remain very confident again in livestock. We believe will end at the higher end of that range as you look at.

And our next question is coming from David Westenburg with Piper Sandler. Please go ahead.

Speaker Change: The divestiture of our medicated feed additive and water soluble portfolio and assets, we've continued to be disciplined around our capital allocation.

Hi, Thanks for taking the question and congrats on the quarter.

So you gave a lot of commentary on on April of my Brown with cells and it sounds like Theres week on week Bill just wanted to confirm that is in fact clinic administration or end market that youre looking at versus like stocking work on this.

Speaker Change: That said, our pumpkin petcare. It last year. This is something that as a leadership team. We continue to do we look at every asset we have we want to make sure that we're investing in the highest areas of growth.

Speaker Change: So I think actually Thats something thats, just a rigorous part of how we manage the company and as I think as you look at livestock, obviously, the divestiture of the medicated feed additives portfolio will increase the overall growth of the company and the overall growth of livestock and also help overall on margins, but our real focus of the divestiture really had to do with doubling down and investing and what we see.

Sales out from you veterinarians are really behind the product. It seems like there is some consumer.

Social media kind of stuff I, just wanted to confirm that the D T sales advertising.

Is on track or if theres any kind of changes there and then just finally, if I could squeeze in just one more in terms of your assumptions on that high single digit in Durham, what is the.

Speaker Change: Great potential in the livestock industry.

Speaker Change: And really playing to what our core strength.

Speaker Change: Preventatives into antibiotic alternatives into genetics, as we think about vaccines and biologics and new genetic solution. So again, we'll continue to look at our portfolio as we always have and as we've done every year, but remain confident in livestock and especially this year and our ability to grow faster than the market.

Assumption in terms of competitive launch there. Thank you very much and again congrats on the quarter.

Yes, David look I'll take.

I'll take a stab at this and then Christian May add some first of all when you look at the <unk> sales in the U S. Keep in mind. The Wella is sold direct to clinics and the turnaround is very fast.

Speaker Change: And our next question is coming from David Westenburg with Piper Sandler. Please go ahead.

So there's no sort of channel dynamics to play out in terms of what we're seeing what we're seeing from week to week is actually coming directly from what the clinics ordering.

David Michael Westenberg: Hi, Thanks for taking the question and congrats on the quarter.

David Michael Westenberg: So you gave a lot of commentary on on April <unk> ourselves and it sounds like Theres week on week Bill just wanted to confirm that is in fact clinic administration or end market that you are looking at versus like stocking. We're on this.

And then look DTC continues to be on track as we said in our prepared commentary part of the increase you see in.

Our SG&A spend is really.

As in promotion behind our pain franchise, including the well in the U S is a big part of that and then when you think about them of course very pleased with our performance here.

David Michael Westenberg: Sales out from you veterinarians are really behind the product. It seems like there is some consumer.

David Michael Westenberg: Social media kind of stuff I, just wanted to confirm that the DTC sales advertising.

$360 million of 25% now there are some soft comp and that but when we neutralize for that we still see really really strong underlying growth and strong demand and we continue to be able to take price across there now of course, it's still early in the year. So as we look at particularly in the back half we are factoring different scenarios around what's the timing.

Speaker Change: Is on track or if theres any kind of changes there and then just finally, if I could squeeze in just one more in terms of your assumptions on that high single digit in Durham, what is the.

David Michael Westenberg: Assumption in terms of competitive launch there. Thank you very much and again congrats on the quarter.

Competition, and while we remain confident in our ability to continue to grow our franchises pulse competition as we're doing in trio.

Speaker Change: Yes, David look I'll take.

Speaker Change: I'll take a stab at this and then Chris May add some first of all when you look at the <unk> sales in the U S. Keep in mind. The Wella is sold direct to clinics and the turnaround is very fast.

Can be some near term or short term promotional activity that we are mindful right. So we do factor those into our thinking.

In terms of how we land at the high single digit range, which is up from what we said last time, which was mid to high single digit. So clearly our confidence continues to increase there.

Chris: So there's no sort of channel dynamics to play out in terms of what we're seeing what we're seeing from week to week is actually coming directly from what the clinics ordering.

And our next question is coming from <unk> Prasad with Barclays. Please go ahead.

Chris: And then look DTC continues to be on track as we said in our prepared commentary part of the increase you see in.

Chris: Our SG&A spend is really.

Chris: As in promotion behind our pain franchise, including the well in the U S is a big part of that and then when you think about them of course very pleased with our performance here.

Your line is open chicken mute function.

Okay. We will take our next question from Brian <unk> with William Blair. Please go ahead.

Speaker Change: $360 million of 25% now there are some soft comp and that but when we neutralize for that we still see really really strong underlying growth and strong demand and we continue to be able to take price across there now of course, it's still early in the year. So as we look at particularly in the back half we are factoring different scenarios around what's the timing.

Hey, good morning, everyone. Thanks for taking the question.

First on library, well I'll ask two upfront here on my Birla can you just talk about are you starting to see any pockets of that's going for maybe the more severe OA dogs and being used in the moderate OA population anything you guys can do to kind of help push that market development.

Because that seems to be the bigger opportunity as you as this grows over the coming years follow up second question is youre spending over 600 million R&D now I think we're about a year out from from the nice Investor Day, you guys held for US last year any meaningful updates in the pipeline that you guys can share with us either new products or lifecycle innovation that might be coming in the near to medium.

Speaker Change: Competition, and while we remain confident in our ability to continue to grow our franchises pulse competition as we're doing in trio.

Speaker Change: Can be some near term or short term promotional activity that we are mindful right. So we do factor those into our thinking.

Speaker Change: In terms of how we land at the high single digit range, which is up from what we said last time, which was mid to high single digit. So clearly our confidence continues to increase there.

Thanks.

Sure.

Do you want to take the first one on the road and I could take the R&D question, Yes, I'll be happy to look we continue to be very pleased with the performance of labella as we've said both the U S and international we did complete a recent survey of vet clinics across European markets and after three years in the market. We are certainly seeing the transition too.

Speaker Change: And our next question is coming from velocity Prasad with Barclays. Please go ahead.

Balaji V. Prasad: Your line is open chicken mute function.

Having a lot more moderate cases in fact.

Balaji V. Prasad: We will take our next question from Brian <unk> with William Blair. Please go ahead.

It's based on surveys are saying more than 50% of the cases youre seeing now are moderate and even some mild cases coming into the mix. So that's very encouraging and again and that also contributed to an increase in Muslim therapy going somewhere between seven and eight months now is what we're estimating based on those surveys with that so that.

Brian: Hey, good morning, everyone. Thanks for taking the question.

Brian: First on <unk> I'll ask two upfront here on my Birla can you just talk about are you starting to see any pockets of that's going for maybe the more severe OA dogs and being used in the moderate OA population anything you guys can do to kind of help push that market development.

<unk> is what we count.

Brian: Because that seems to be the bigger opportunity as you as this grows over the coming years follow up second question is youre spending over 600 million R&D now I think we're about a year out from from the nice Investor Day, you guys held for US last year any meaningful updates in the pipeline that you guys can share with us either new products or lifecycle innovation that might be coming in the near to medium.

Count on and anticipate and we're seeing that across international markets. We're still very early in the U S.

But that's the sort of progression we would expect that we'll continue to educate.

On the product as we've talked about to continue to drive that as we move forward Kristen sure and Brandon to your second question on our R&D. Yeah, you probably saw the strong growth in R&D in the quarter that it really <unk>.

Brian: Thanks.

Brian: Sure.

We remain very confident in our pipeline and many of the key areas that we mentioned at Investor Day, which was I guess, a little less than a year ago.

Speaker Change: Do you want to take the first one on Leviathan and I can take the R&D question, Yes, I'll be happy to look we continue to be very pleased with the performance of labella as we've said both U S and international we did complete a recent survey of vet clinics across European markets and after three years in the market. We are certainly seeing the transition too.

Really investing behind some of the key therapeutic areas, both our long lapsing monoclonal antibodies, which will be some of the more near term launches we are not making any announcements on today's call. Obviously with regards to that but that's going to be some of the more near term launches and then as we talked about we are very excited as you look at renal as you look at oncology and.

Speaker Change: Having a lot more moderate cases in fact.

Speaker Change: Based on surveys are saying more than 50% of the cases youre seeing now are moderate and even some mild cases coming into the mix. So that's very encouraging and again and that also contributed to an increase in Muslim therapy going somewhere between seven and eight months now is what we're estimating based on those surveys with vet so that.

Cardiovascular and diagnostics to continue to invest in those areas, where we see huge potential as you look at renal cardiology and oncology, we always Saturdays had last year those are more in the four years plus range. So there is no.

Near term updates there, but we continue to launch products. If you look at as I spoke in my script about bond cat.

Balaji V. Prasad: <unk> is what we count.

Balaji V. Prasad: Count on and anticipate and we're seeing that across international markets. We're still very early in the U S.

Which is around anxiety for cat, that's really important and it may not seem like a huge product overall, but he can unlock for the rest of our portfolio. If we can get captured the clinic, we can sell more of a lot of our other product and more importantly meet the needs of the cat population, which to date has been very under Medicalized. So.

Balaji V. Prasad: But that's the sort of progression we would expect that we'll continue to educate on the product as we've talked about to continue to drive that as we move forward Kristen sure Brian to your second question on our R&D, Yes, you probably saw the strong growth in R&D in the quarter that is really because we remain very confident in our pipeline and many of the key areas that we.

No. We don't give you all the visibility that you're dying for an R&D, but I think as you can see we've continued to deliver on our pipeline and volt and really innovative products like what youre seeing in the ghrelin Olympia, but also like lifecycle innovations that will really extend the life of important franchises such as some of our long acting monoclonal antibodies, which would be more in the near term.

Brian: And at Investor Day, which was I guess, a little less than a year ago.

Brian: Really investing behind some of the key therapeutic areas, both our long lapsing monoclonal antibodies, which will be some of the more near term launches we are not making any announcements on today's call. Obviously with regards to that but that's going to be some of the more near term launches and then as we talked about.

Okay.

Our next question is coming from Steve Scala with TD Cowen. Please go ahead.

Brian: Very excited as you look at renal.

Hi, Good morning. This is Chris on for Steve Scala mid.

Brian: As you look at oncology and cardiovascular and diagnostics to continue to invest in those areas, where we see huge potential as you look at renal cardiology and oncology. We always had as we said last year those are more in the four years plus range. So there is no near term updates there, but we continue to launch products as you look at as I spoke in my script.

Two questions first on livestock.

Any impact from the ongoing uptake of hbos and want to be in terms of windows seven.

Second on the U S companion animal market, what underlying trends that you're seeing in U S pet adoptions and abandonment.

<unk> seen any change in share of wallet share of casino catch them up.

Medicine, especially as other product categories.

Brian: That bond cat, which.

Brian: Which is around anxiety for cat, that's really important and it may not seem a huge product overall, but he can unlock for the rest of our portfolio. If we can get captured the clinic, we can sell more of a lot of our other products and more importantly meet the needs of the population, which to date has been very under Medicalized. So.

Thanks, Steve I'll try to take those and what May certainly if there's anything I Miss you can jump in.

We like all of you are continuing to watch the outbreak of H five N. One.

If you look at the portfolio that we have in our capabilities, we stand ready to support both governments and customers across the globe as they look at potential solutions to address H five N. One both on the vaccine side and on the diagnostic side to.

Brian: No. We don't give you all the visibility that you are dying for an R&D, but I think as you can see we've continued to deliver on our pipeline and bolt really innovative products like what youre seeing in labella Olympia, but also like lifecycle innovations that will really extend the life of important franchises such as some of our long acting monoclonal antibodies, which would be more in the near term.

To date, we have not been requested.

To do that but I think like many of our peer companies, we stand ready to support the government authorities. When that's needed you know I do want to reassure people I mean data has come out that the milk is safe.

Brian: Okay.

Brian: Our next question is coming from Steve Scala with TD Kelvin. Please go ahead.

Data came out from <unk> This morning, and a reassuring people that the meat. They eat is safe. So we have not seen any impact to our business whatsoever with regards to this this is a major issue for our customers and our real focus is supporting them through that and making sure that we focus on what we can do is certainly around bio security surveillance and detection, which.

Brian: Hi, Good morning. This is Chris on for Steve CLO two.

Chris: Two questions first on livestock.

Chris: Any impact from the ongoing uptake of hbos and want to be in influenza.

Chris: On the U S companion animal market, what underlying trends that you're seeing in U S pet adoption and abandonment.

More and more engaged with the USDA and others that you know given our diagnostics portfolio as well. So no we have not seen any impact to our business to date on that with regards to the U S.

Brian: And are you seeing any change in share of wallet.

Brian: Medicines for some other product categories.

Brian: Yes.

Speaker Change: Thanks, Steve I'll try to take those and what May certainly if there's anything I Miss you can jump in.

And looking at we have not seen.

Speaker Change: We like all of you are continuing to watch the outbreak of H five N. One.

Significant U S national increase in people, bringing their pet's back to shelters I know, there's been some isolated here and there but as the overall U S that is not a trend.

Brian: If you look at the portfolio that we have in our capabilities.

Brian: Stand ready to support both governments and customers across the globe as they look at potential solutions to address H five N. One both on the vaccine side and on the diagnostic side.

And those pets are they all adopted during Covid are all aging and you will continue to be drivers of our growth and not just in the U S. But globally and I know there has been some talk around consumer sentiment and is that really changing obviously, we've seen some changes and Pat.

Brian: To date, we have not been requested.

Speaker Change: To do that but I think like many of our peer companies, we stand ready to support government authorities. When that's needed I do want to reassure people I mean data has come out that the milk is safe.

Sort of collars, our streets and things like that but what's really been cleared what we've talked about for a long time is when you think about animal health care. It is and it is essential they are not skimping on their animal health care and if you look at the trends in the quarter as you look at an increase in periodic visits as what you talked about the reality is when their animals.

Brian: Data came out from <unk>. This morning, reassuring people that meet they eat is safe. So we have not seen any impact to our business whatsoever with regards to this this is a major issue for our customers and our real focus is supporting them through that and making sure that we focus on what we can do is certainly around bio security surveillance and detection, which are.

Needs care, they're getting that Karen if you look at spend per visit in the U S. We're seeing spend per visit up 6% in the U S, which means again consumers and pet owners wanted to take care of their animals and they continue to invest in this you look at the strength of the human animal bond. This is one of the reasons that we say animal health is a very big.

Brian: More and more engaged with the USDA and others, you know given our diagnostics portfolio as well. So no we have not seen any impact to our business to date on that with regards to the U S.

Brian: And looking at we have not seen.

Brian: <unk> U S national increase in people, bringing their pet's back to shelters I know theres been some isolated here and there, but as the overall U S that is not a trend.

Zillion industry that people will continue to invest in the health of their pet and that's certainly what we're seeing in the quarter and as you saw our expanded operational guidance for the year really being driven by our companion animal portfolio and that's what we expect for the year as well.

Brian: And those pets are they all adopted during Covid are all aging and you will continue to be drivers of our growth and not just in the U S. But globally and I know there has been some talk around consumer sentiment and is that really changing obviously, we've seen some changes and Pat.

Thank you we'll take our next question from Nathan Rich with Goldman Sachs. Please go ahead.

Great Good morning, and thanks for the questions.

First just a clarification on Argentina, and the price increase I guess does the price increase you referenced coincide with December devaluation. It sounds like that price increases wasn't contemplated in the initial operational revenue range for the year.

Brian: Sort of collars, our streets and things like that but what's really been cleared what we've talked about for a long time is when you think about animal health care. It is and it is essential they are not skimping on their animal health care and if you look at the trends in the quarter as you look at an increase in periodic visits as what you talked about the reality is when their animals.

So I guess like as we think about the impact going forward.

The contribution should be similar over the balance of the year I guess, assuming no major change in the currency dynamics in that market. So is that the correct way to think about it and then.

Brian: <unk> care, they're getting that Karen if you look at.

Brian: Spend per visit in the U S. We're seeing spend per visit up 6% in the U S, which means again consumers and pet owners wanted to take care of their animals and they continue to invest in this you look at the strength of the human animal bond. This is one of the reasons that we say animal health is a very resilient industry that people will continue to invest in to help us.

On derm.

The company decided to start selling alpha call chewable through distribution could you maybe just talk about the factors that led to that decision and any impact on topline and margins for <unk> as well as the broader portfolio as you think about the potential benefits of.

Brian: And that's certainly what we're seeing in the quarter and as you saw our expanded operational guidance for the year really being driven by our companion animal portfolio and that's what we expect for the year as well.

Selling that broader portfolio through distribution.

I'll take the first one Nathan just on Argentina, clearly the devaluation occurred prior to us issuing guidance and we have plans and continue to see our ability to take price fairly significantly in that market.

Brian: Thank you we'll take our next question from Nathan Rich with Goldman Sachs. Please go ahead.

Nathan Allen Rich: Great Good morning, and thanks for the questions.

Perhaps beyond what we factored in and so yes, we won't sit here in our forecasts.

Nathan Allen Rich: First just a clarification on Argentina, and the price increase I guess does the price increase you referenced coincide with the December devaluation. It sounds like that price increases wasn't contemplated in the initial operational revenue range for the year.

Forecast, what FX is going to do well.

What's going to happen in Argentina, as a hyperinflationary market. After all so we'll continue to monitor that and so when we're only through one quarter here and we are on our way through the second quarter. So we're factoring that into our thinking as well and we are seeing an ability to continue to do that but we can't we can't sort of forecast forecast for the rest of the year and what will happen. There. So we are.

Nathan Allen Rich: So I guess like as we think about the impact going forward.

Nathan Allen Rich: That contribution should be similar over the balance of the year I guess, assuming no major change in the currency dynamics in that market. So is that the correct way to think about it and then.

Measured in how we treat that I would say a portion again to repeat what I said earlier a portion of our increase is certainly coming from that you know I would say somewhere between.

Nathan Allen Rich: On derm.

Nathan Allen Rich: The company decided to start selling alpha call chewable through distribution could you maybe just talk about the factors that led to that decision and any impact on topline and margins for <unk> as well as the broader portfolio as you think about the potential benefits of.

A third to a half of the increase that we're giving in terms of operational guidance coming from that because we were getting the operational.

Lift.

From price there and the rest of it coming from the rest of the underlying business as we've talked about is how I would I would think about that.

Nathan Allen Rich: Selling a broader portfolio through distribution.

Speaker Change: I'll take the first one Nathan just on Argentina, clearly the devaluation occurred prior to us issuing guidance and we have plans and continue to see our ability to take price fairly significantly in that market.

In terms of term I'll start and then Steve question, What's your outlook clearly we have products in derm with Abercrombie insider point, they've been in the market for over 10 years, and seven years, respectively, and the lower satisfaction on these products is very high among vets and pet owners.

Speaker Change: Perhaps beyond what we factored in and so yes, we won't sit here and.

Yeah.

<unk> as an important element because one does a preference with pet owners and perhaps best to have a palatable chewable.

Speaker Change: Forecast, what FX is going to do or what's going to happen in Argentina as a hyperinflationary market. After all so we'll continue to monitor that and so when we're only through one quarter here and we all on our way through the second quarter. So we're factoring that into our thinking as well and we are seeing an ability to continue to do that but we can't we can't sort of forecast forecast.

And so we see that as one meeting a need in the market as well as an important part of a defense strategy and so as we anticipate competition in the <unk>. We believe that competition will most likely be a film called the tablets and the conversion to <unk> was important to US we are seeing that conversion occur across international markets.

Speaker Change: For the rest of the year and what will happen. There. So we are a bit measured in how we treat that I would say a portion again to repeat what I said earlier a portion of our increase is certainly coming from that.

And particularly if you look at Europe, we now have about 40% conversion to chewable after being in the market. The last couple of years. So that's very encouraging we've just launched in the U S. At the same time as we launched the boiler.

Speaker Change: See somewhere between a.

Speaker Change: A third to a half of the increase that we're giving in terms of operational guidance coming from that because we were getting the operational.

So we want to look to potentially accelerate that transition and that conversion, hence what went into the thinking here and so it's still relatively early.

Speaker Change: Lift.

Speaker Change: Some price there and the rest of it coming from the rest of the underlying business as we've talked about is how I would I would think about that.

Speaker Change: In terms of term I'll start and then Steve question, What's your outlook clearly we have products in derm with Abercrombie insider point, they've been in the market for over 10 years, and seven years, respectively, and the lower satisfaction on these products is very high among vets and pet owners.

On the a little bit of contribution in the quarter here, perhaps out of the 25% growth you saw in Q <unk>, there might be two points coming from that and so we will see some more of that occur in the second quarter.

But it is important part of a different strategy.

Speaker Change: Yes.

We will take our next question from <unk> Prasad with Barclays. Please go ahead.

Speaker Change: <unk> as an important element because one there is a preference for pet owners and perhaps best to have a palatable chewable.

Hi, good morning, everyone and apologies for missing my spot earlier.

Speaker Change: And so we see that as one meeting a need in the market as well as an important part of a defense strategy.

And also I guess my question sorry to beat.

So on Libre.

Kidney stone sand how is your messaging changed if at all with the vets and how they use all the triage for dogs that they want to treat.

Speaker Change: And so as we anticipate competition in <unk>.

Speaker Change: <unk>, we believe that competition will most likely be a film called the tablets and the conversion to epic Retrievable as important to US we are seeing that conversion occur across international markets. In particular, if you look at Europe. We now have about 40% conversion to chewable after being in the market. The last couple of years. So that's very encouraging.

And what does this mean for the total addressable market one.

And two can you help us understand the quarterly cadence for the rest of the year I think signing before was that <unk> is expected to be the weakest quarter and second half stronger than one edge on the back of this brain does this alter the quarterly cadence in any way. Thank you.

Speaker Change: We just launched in the U S. At the same time as we launched the gorilla.

Speaker Change: So we want to look to potentially accelerate that transition and that conversion, hence what went into the thinking here and so it's still relatively early.

Sure I'll take your first question.

But largely on Libra and.

You can take the second one on quarterly cadence.

Speaker Change: On the a little bit of contribution in the quarter here, perhaps out of the 25% growth you saw in Q <unk>, there might be two points coming from that and so we will see some more of that occur in the second quarter.

As we think about how we're approaching that.

They are at the center of care and our focus has always been around ensuring that are educated on the products that they understand it they understand how it should be used when it should be used et cetera, certainly since a lot of the social media, even more committed than ever to make sure that that have better access to a lot of the education, we've always been providing and we significantly.

Speaker Change: But it is important part of our different strategy.

Speaker Change: We will take our next question from <unk> Prasad with Barclays. Please go ahead.

Prasad: Good morning, everyone and apologies for missing my spot all year on.

<unk> increased our education with vets and their access so you know things that we've done we've done over a thousand Webinars, we have daily sessions with our Chief Medical Officer, Dr. Richard Goldstein to make sure. They can of interactive sessions, we have an always on customer support team and I think really what youre seeing with regards to that.

Prasad: And also I guess my question sorry to beat.

Prasad: So on Libre.

Balaji V. Prasad: I'm curious to understand how is your messaging changed if at all with the vets and how they use all the triage for dolls that they want to treat.

Balaji V. Prasad: And what does this mean for the total addressable market one.

Balaji V. Prasad: Two can you help us understand the quarterly cadence for the rest of the year I think the understanding before was that <unk> is expected to be the weakest quarter and second half stronger than one edge on the back of this brain does this alter the quarterly cadence in any way. Thank you.

And how they feel about the product is the confidence that they have access to the education that they need and if you look at that and that is why you're seeing such a strongly positive experience that is from pets, but from that who really are confident in the product is when you mentioned their confidence in prescribing the product more their confidence in the safety and efficacy of the product as we've talked about we invest a lot.

Two: Sure I'll take your first question.

Speaker Change: On Libra and what do you expect you can take the second one on quarterly cadence.

And so whereas in veterinary education, and we always have.

Our vet operations in every market. So I think this is something that's been our strength clearly with the social media, we have doubled down to ensure that there is more access to this veterinary education.

Speaker Change: As we think about how we're approaching that.

Speaker Change: Thats are at the center of care and our focus has always been around ensuring that are educated on the products that they <unk>.

To make sure that any of that who wants to understand more has access to experts both internally as well as external kols. So they can best understand the product and that again underscores our confidence in this product.

Speaker Change: Understand it they understand how it should be used when it should be used et cetera.

Speaker Change: Since a lot of the social media, even more committed than ever to make sure that that's.

Speaker Change: Have better access to a lot of the education, we've always been providing and we significantly increased our education with vets and their access. So you know things that we've done we've done over a thousand Webinars, we have daily sessions with our Chief Medical Officer, Dr. Richard Goldstein to make sure. They can have interactive sessions, we haven't always on customer.

We've talked about and the fact that we continue to believe this product will be ability.

Category, not just labella labella Celesio, we continue to connect this will be a 1 billion dollar franchise first of all this and that is really rooted in the safety and efficacy of this product and then investment we're putting into that and pet owners to make sure they understand the product.

Speaker Change: Support team and I think really what youre seeing with regards to that and how they feel about the product is the confidence that they have access to the education that they need and if you look at that that is why you're seeing such a strongly positive experience that is from pets, but from that.

Yeah, but largely in terms of quarterly cadence and I'll answer the question specific with respect to labella few meaningful overall I can certainly recap.

That conversation, but look clearly $40 million contribution in the first quarter and keep in mind, we continue to see really strong growth across our international markets, which grew 71% on the quarter as well. So those will continue to drive growth for us we won't get ultra specific in terms of the exact contribution as the quarters go but we would expect continuing to ramp up from that 40 through the year.

Speaker Change: Who really are confident in the product as Wendy mentioned their confidence in prescribing the product more their confidence in the safety and efficacy of the product as we've talked about we invest a lot into what is in veterinary education and we always have in our event operations in every market. So I think this is something that's been our strength clearly with the social media, we have doubled down to ensure that there is more access to it.

And then of course, the fourth quarter in terms of percentage growth will be lapping the $44 million that we delivered in the fourth quarter and the first quarter of launch.

Speaker Change: Veterinary education.

Speaker Change: To make sure that any of that who wants to understand more has access to experts both internally as well as external kols. So they can best understand the product and that again underscores our confidence in this product that we've talked about and the fact that we continue to believe this product will be ability.

Thank you we'll take our next question from Glen Santangelo with Jefferies. Please go ahead.

Oh, yeah. Thanks for taking my question.

Kristen obviously the outlook for trio in Durham continues to be encouraging here, but just given the recent launch of be iron local launches that presumably may be coming in the second half. If you could just look out to 2025 for a second I'm kind of curious if you anticipate any sort of noticeable shift in the compare.

Speaker Change: Category, not just labella, but relative to last year. We continue to connect this will be a 1 billion dollar franchise first of all what I said and that is really rooted in the safety and efficacy of this product and then investment we're putting into that and pet owners to make sure they understand the product.

Speaker Change: But largely in terms of quarterly cadence and I'll answer the question specific with respect to labella few meaningful overall I can certainly recap.

Ziv landscape or anything that you think might impact your ability to take price and the reason I ask because some are getting concerned about increasing competition and a weakening consumer at the same time, maybe would impact the company's ability to take price increases consistent with what you have done historically, so any sort.

Speaker Change: That conversation, but look clearly $40 million contribution in the first quarter and keep in mind, we continue to see really strong growth across our international markets, which grew 71% on the quarter as well. So those will continue to drive growth for us we won't get ultra specific in terms of the exact contribution as the quarters go but we would expect continuing to ramp up from that 40 through the year.

The high level commentary I think would be helpful. Thanks.

Sure I'll start and then Whitney you can certainly build on this one.

Speaker Change: And then of course, the fourth quarter in terms of percentage growth will be lapping the $44 million that we delivered in the fourth quarter and the first quarter of launch.

We remain very confident and it's really based on our historical performance and I think you can look at that we invest in the lifecycle innovation across our franchises. We were number five let's be clear guys and parents when we entered with comparisons compared to trio and were now number two we're facing competition from the leader in Parasiticide and we grew our share.

Speaker Change: Thank you we'll take our next question from Glen Santangelo with Jefferies. Please go ahead.

Glen Joseph Santangelo: Oh, yes, thanks for taking my question.

Glen Joseph Santangelo: Kristen obviously the outlook for trio in Derm continues to be encouraging here, but just given the recent launch of be iron local launches that presumably may be coming in the second half. If you just look out to 2025 for a second I'm kind of curious if you anticipate any sort of noticeable shift in the competitive.

<unk>, 7%.

If you look at Q1 in the U S. So even with very strong competition. We continue to grow share. So we remain confident we can continue to grow our parasiticide and our dermatology franchises, even with competition I mean Perez has always been a very competitive space with most companies operating there we think our strength.

Glen Joseph Santangelo: Ive landscape or anything that you think might impact your ability to take price and the reason I ask is some are getting concerned about increasing competition and a weakening consumer at the same time, maybe would impact the company's ability to take price increases consistent with what you have done historically, so any sort.

Obviously with the that's our strength with pet owners really seeing tremendous growth in our franchises for both trio and term in alternative channels and home delivery and retail and we see great strength. There as you look at the auto ship, we continue to increase our auto ship out there, which absolutely increases compliance, which we think is really important.

Speaker Change: High level commentary I think would be helpful. Thanks.

As you look at for example, the alternative channels. They grew 55% now that was a little bit of a weaker comp. If you look at last year, but even if you adjust for all that that's 25% plus growth in the alternative channels. So we really believe that we can continue to grow this franchise based on the strength of our products the strength of our portfolio.

Speaker Change: Sure I'll start and then you can certainly build on this one.

Speaker Change: We remain very confident and it's really based on our historical performance and I think you can look at that we invest in the lifecycle innovation across our franchises. We were number five let's be clear guys and parents when we entered with comparisons compared to trio and were now number two we're facing competition from the leader in Parasiticide and we grew our share.

Our lifecycle innovation, if you look at what we're doing with <unk> as well as leveraging some of these new channels, which have the benefit of increased compliance. So back again, it's our confidence not just for 'twenty for that for 25 I don't know wondering if you want to add anything on that well the only thing I would say two things one we are not seeing a weakening consumer.

Glen Joseph Santangelo: 0.7%.

Glen Joseph Santangelo: If you look at Q1 in the U S. So even with very strong competition. We continue to grow share. So we remain confident we can continue to grow our parasiticide and our dermatology franchises, even with competition I mean Perez has always been a very competitive space with most companies operating there we think our strength.

You saw us post high double digit growth across trio and I'll keep their own franchise and even if we normalize for some of the tailwind from last year, we still have high double digit growth.

Glen Joseph Santangelo: Lee with the that's our strength with pet owners.

Each of those.

Glen Joseph Santangelo: Really seeing tremendous growth in our franchises for both trio and term in alternative channels and home delivery and retail and we see great strength. There as you look at the auto ship, we continue to increase our auto ship out there, which absolutely increases compliance, which we think is really important as you look at for example, the alternative channels. They grew 55.

So that's certainly demonstrates continued demand for our products and our innovation. The other one I would say is look as we look ahead and we're not going to give guidance specific to 2025 here, but we're confident in our ability to grow in the face of competition now there can be some short term promotional activity that might have some impact but beyond those we're confident in our products and we'll see what the labels are that we're going to compete against.

Glen Joseph Santangelo: 5% now that was a little bit of a weaker comp. If you look at last year, but even if you adjust for all that that's 25% plus growth in the alternative channels. So we really believe that we can continue to grow this franchise based on the strength of our products the strength of our portfolio.

Okay.

Thank you we'll take our next question from Chris Schott with Jpmorgan. Please go ahead.

Alright, great. Thanks, so much just two questions from me just continuing on trio can you quantify even if it was a channel dynamic benefit you saw here and just give us little more color on that.

Glen Joseph Santangelo: Our lifecycle innovation, if you look at what we're doing with chewable as well as leveraging some of these new channels, which.

Maybe the size of that.

And then the second one was labella U S.

Speaker Change: The benefits of increased compliance so back again, it's our confidence not just for 'twenty four but for 2005 I don't know waiting if you want to add anything on that the only thing I would say two things one we are not seeing a weakening consumer.

Should we expect a similar dynamic in the U S that we saw ex U S where initial uptake is more in the severe OA pets, which I think would be maybe a little less sensitive to some of the headlines we've seen over the past month and then the moderate piece of the business is.

Speaker Change: You saw us post high double digit growth across trio and achieve their own franchise and even if we normalize for some of the tailwind from last year, we still have high double digit growth.

Opening kind of a year or two are further out or is the U S. Market. Do you think you can different words, those severe and moderate may be scaling kind of simultaneously with chiller. Thanks. So much for sure. Thanks, Chris I'll, let you take it one either to your question I can follow up on Labella, Yeah, absolutely look the short answer is no. There is no channel dynamics that we're seeing here as I mentioned, just a moment ago.

Speaker Change: Each of those.

Speaker Change: So that's certainly demonstrates continued demand for our products and our innovation. The other one I would say is look as we look ahead and we're not going to give guidance specific to 2025 years, but we're confident in our ability to grow in the face of competition now there can be some short term promotional activity that might have some impact but beyond those we're confident in our products and we will see what the labels are that we're going to compete against.

So we did have dynamics last year in the quarter, where you saw destocking.

Coming from promotional timing of promotions in the prior year and more pre priced by ups and so that did provide some tailwind here. So we posted a 61% growth, Ontario globally and that's that's the same percentage growth in the U S.

Speaker Change: Thank you we'll take our next question from Chris Schott with Jpmorgan. Please go ahead.

Christopher Thomas Schott: Great. Thanks, so much just two questions from me just continuing on trio can you quantify I think there was a channel dynamic benefit you saw here and just give us a little more color on.

$205 million growing 61% and if you were to say Theres no precision here, but I would say.

Estimates are that if we factor in the tailwind from last year that may account for about half of the growth that we're seeing so you're still remaining very significant growth on.

Christopher Thomas Schott: Maybe the size of that.

Speaker Change: And then the second one was labella U S.

Speaker Change: Should we expect a similar dynamic in the U S that we saw ex U S where initial uptake is more in the severe OA pets, which I think would be maybe a little bit less sensitive to some of the headlines we've seen over the past month, and then moderate piece of the business is happening kind of a year or two are further out or is the U S market, you're thinking different words.

Ontario, and there's no channel dynamics in terms of inventories to speak of in the current year sure and on your second question with regards to labella in the U S. I mean, what we have seen historically in Europe and in markets that launched first is it is often put into the severe dogs, who are desperate for.

A new therapy, initially and moving to the moderate but we've learned that lesson. After three years in Europe, and so we're making sure as we launch in the U S that we get into that moderate as you think about the early experience trial. For example that we did in the U S. We made sure there was a balance of mild moderate and more severe cases, so that they have experience and they can see the impact of the product in that as you know.

Speaker Change: Severe and moderate may be scaling kind of simultaneously with each other thanks, so much for sure. Thanks, Chris I'll, let you take it one either to your question I can tell from Abella, Yeah, absolutely look.

Speaker Change: The short answer is no. There is no channel dynamics that we're seeing here as I mentioned, just a moment ago. We did have dynamics last year in the quarter, where you saw destocking.

You can look at some of the data that when he spoke about earlier, which is we have more than 50% of outside of the U S of patients right now in moderate and mild to moderate cases, which I think is tremendous growth and what youre seeing when you do that is also an increase in compliance. So compliance is now between 7% and eight months up from six to seven months outside the U S. So our.

Abella: Coming from promotional timing of promotions in the prior year and more pre price by ups and so that did provide some tailwind here. So we posted 61% growth, Ontario globally, and that's the same percentage growth in the U S.

Abella: $205 million growing 61% and if you were to say Theres no precision here, but obviously our internal estimates are that if we factor in the tailwind from last year that may account for about half of the growth that we're seeing so you're still remaining very significant growth.

Goal as we were launching in the U S. As we design the early experience trial and as we market with that is to make sure that this is a product that can be a first line therapy for mild moderate and severe cases, and making sure that we can get that conversion into mylan moderate similar to where we are in Europe faster than the U S. So that is certainly our focus as we think about growing.

Abella: Ontario, and there's no channel dynamics in terms of inventories to speak of in the current year sure and on your second question with regards to labella in the U S. I mean, what we have seen historically in Europe and in markets that launched first is it is often put into the severe dogs, who are desperate for.

Brand in the U S.

Thank you we'll take our final question from Nevada tie with BNP. Please go ahead.

Abella: A new therapy, initially and moving to the moderate.

Hi, good morning, Thanks for taking my questions and thanks for the color on Libra.

Abella: But we've learned that lesson after three years in Europe, and so we're making sure as we launch in the U S that we get into that moderate as you think about the early experience trial. For example that we did in the U S. We made sure there was a balance of mild moderate and more severe cases, so that they have experienced and they can see the impact of the product in that as you even look at some of the data that when he spoke about earlier.

Some follow ups.

Or do you see earnings from those assets from your online education session and how many that.

Approximately <unk> with sell through so far also interested in your early dialogue with the FDA if any is that true.

Pennsylvania in Susquehanna product launch so far thank you.

Abella: Which as we have more than 50% of outside of the U S of patients right now in moderate mild to moderate cases, which I think is tremendous growth and what youre seeing when you do that is also an increase in compliance. So compliance is now between 7% and eight months up from six to seven months.

Sure. Thank you with regards to your first question.

The best way for each active we've reached reach out to our tech bulletins with letters directly from our Chief Medical Officer, almost every bank in the U S where any of that who is a customer of ours in the U S. We think that that's really critical any of those that can join for example are opened office hours with our Chief Medical Officer, Richard Goldstein, We've invited back to these.

Abella: Outside the U S. So our goal as we were launching in the U S. As we design the early experience trial and as we market with that is to make sure that this is a product that can be a first line therapy for mild moderate and severe cases, and making sure that we can get that conversion into mylan moderate similar to where we are in Europe faster than the U S. So that is certainly our focus.

Webinars and really working with our veterinary operations group in every area across the U S to make sure. They have access not just to internal and external so thousands of that have attended these webinars to date again. This is something we normally do obviously, we'd put it it's more urgency to make sure that we have more ways to engage with us.

Abella: As we think about growing that brand in the U S.

Abella: Thank you we'll take our final question from Nevada tie with BNP. Please go ahead.

Nevada: Hi, good morning, Thanks for taking my questions and thanks for the color on Libra.

To make sure that the veterinarians questions are answered and I think as you look at the fact that our four week trailing sales continue to accelerate as Whitney mentioned is demonstration that deals are getting the education they need to confidently prescribe. This product appropriately are there and with regards to the questions with regards to our interactions with the FDA.

Nevada: Some follow ups.

Nevada: The earnings from those assets from your online education session.

Nevada: How many of that.

Nevada: Approximately <unk> with sell through so far also interested in your early dialogue with the FDA if any.

Nevada: Pennsylvania in Susquehanna product launch so far thank you.

As you know from covering US those are regular conversations we have with the FDA. All the time, that's normal course of business for any company as you launch a new brand.

Speaker Change: Sure. Thank you with regards to your first question.

Speaker Change: The best way for each active we've reached reach out to our tech bulletins with letters directly from our Chief Medical Officer, almost every event in the U S where any of that with a customer of ours in the U S. We think that that's really critical any of those that can join for example are opened office hours with our Chief Medical Officer, Richard Goldstein.

You expand that is sharing the information in the U S and having a dialogue around that sharing the global information with them. So that the usual course of what we would do as we launch a product and honestly, even when a product on the market for a year. So we continue to be a usual course and collaborate with the FDA to make sure that they have all the information they need there.

Nevada: That's two these webinars and really working with our veterinary operations group in every area across the U S to make sure. They have access not just to internal and external so thousands of that have attended these webinars to date again. This is something we normally do obviously, we'd put it it's more urgency to make sure that we have more ways to engage.

So there's nothing out of the ordinary there in the normal engagement with the FDA.

And there are no further questions at this time I'll turn the call to the speakers for any closing remarks.

Thank you.

Sorry back to me.

I really want to thank everyone for joining today.

Nevada: Gauge with us to make sure that the veterinarians questions are answered and I think as you look at the fact that our four week trailing sales continue to accelerate as well and he mentioned is demonstration that deals are getting the education. They need to confidently prescribe. This product appropriately are there and with regards to the questions with regards to our <unk>.

I want to reiterate that this was an outstanding performance this quarter I really want to thank our colleagues for their commitment and I hope Youll see our focus on creating shareholder value I think it's a strong start as we look forward to continued momentum in 2024, we are customer obsessed from unrivaled R&D investment to expanded manufacturing capability.

Nevada: Interactions with the FDA as you know from covering US those are regular conversations we have with the FDA. All the time, that's normal course of business for any company as you launch a new brand.

A world class purpose, driven colleagues everything that we do it so why does it aimed at anticipating and addressing what we believe are the most pressing needs and veterinary care even before they are widely recognized by many others and our scientific breakthroughs have firmly established us as a trusted and preferred partner to our customers and we will continue to invest in.

Nevada: You expand that is sharing the information in the U S and having a dialogue around that sharing the global information with them. So that the usual course of what we would do as we launch a product and honestly, even when a product on the market for years. So we continue to be a usual course and collaborate with the FDA to make sure that they have all the information they need there.

Talent, the pipeline and the capabilities that will support <unk> future growth. So we remain committed to the safety and efficacy of our products and our industry leading products because our treatments change lives based on our track record of performance I think our customers agree as well. So thanks, so much for joining us we look forward to engaging throughout the quarter.

Nevada: So there's nothing out of the ordinary there in the normal engagement with the FDA.

Speaker Change: And there are no further questions at this time I'll turn the call to the speakers for any closing remarks.

Thank you and this does conclude today's program. Thank you for your participation you may disconnect at any time.

Speaker Change: Thank you.

Speaker Change: Sorry, it back to me.

Speaker Change: Thank you I really want to thank everyone for joining today.

Speaker Change: I want to reiterate that this was an outstanding performance this quarter I really want to thank our colleagues for their commitment and I hopefully you'll see our focus on creating shareholder value I think it's a strong start as we look forward to continued momentum in 2024, we are customer obsessed from unrivaled R&D investment to expanded manufacturing capabilities.

Speaker Change: A world class purpose driven colleagues everything that we do at <unk> is aimed at anticipating and addressing what we believe are the most pressing needs and veterinary care even before they are widely recognized by many others and our scientific breakthroughs have firmly established us as a trusted and preferred partner to our customers and we will continue to invest in there.

Speaker Change: Talent pipeline and the capabilities that will support <unk> future growth. So we remain committed to the safety and efficacy of our products and of our industry leading products because our treatments change lives based on our track record of performance I think our customers agree as well. So thanks, so much for joining us we look forward to engaging throughout the quarter.

Speaker Change: Thank you and this does conclude today's program. Thank you for your participation you may disconnect at any time.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Mhm mhm.

Speaker Change: [music].